InvertingBrandParadigms14/ 06/ 2013
Is business still about the creation ofinvestor value?
No! But also yes… value is still about creatingmore than we consume…• Increasingly, brands are being questioned about thei...
What value?Value forwhom?How isvaluecreated?
TheBrandProvidersof capitalProducersof brandsValue &MeaningPrice & CostCompetitive &comparativecontext.Balance of power& i...
Can true reciprocity between the ownersof capital and society ever exist?It will require a new mindset!And greater levels ...
Most brands are parity offers,they do very little that differentiates.Consumers even see them as being thesame.
Real functional innovation will defineconsumer and investor value.• This undermines value in categories, i.e. airlines.• T...
The paradox of innovation.• Innovation holds the seeds of its own demise, just look at Apple today:innovation “re-sets” co...
How brand development evolves.Customer needs& wants.Currentcustomerbehaviour. Technologicalcapabilities.Currentcompetitive...
Understanding people, patterns and howthey create meaning and engage.• Despite fears of “1984”, we are now able to underst...
Will we still have brands around, or willthey die?
As long as people have needs; products &services get named = yes.• I find the debate about the future of brands ridiculous...
We have the rise of the notion of“no value”.
The Internet has created a widespreadnotion that great content is “free”.• Whilst there are important exceptions to this r...
Consumer decision making is brandfocused, not product focused.
This argument is not new…• The famous article by Levitt, “Marketing Myopia”, is old, yet most companies stilldefine their ...
This argument is not new (cont.)…• Industries are overlapping, replacing one another and converging.• Consumers are making...
To re-construct value, you need to de-construct howcustomers solve problems & reconstruct how value iscreated.Then you nee...
You then need to re-construct value logically.
All of what a brand will ever do, is to retain and grow therevenue and margins from the customers we have;and acquire the ...
The number of clients.The lifetime value of these clients.The profit margin of these clients.÷At the same or a lesser cost...
1. Whatever we do is designed to build company value forstakeholders, both internally & externally. This may change, butca...
2. The tools we use to do this, are revenue and margin derivedfrom customers: acquiring them, keeping them and growingthem...
3. This means retaining the right customers, growing theirrevenue and margins, and acquiring the desired customers.Leverag...
4. To do this, we need to identify the right market opportunity; the righttarget customers; the right strategy & the right...
Creating & managing customer value is a function of variouselements that systematically and incrementally build: it isunli...
Brand relevance lies in an ongoing dialogue inwhich “brand meaning” is defined and re-defined.
From one-way communication to interactiveengagement.• The traditional notion was that brand names & identities were “short...
“Meaning” is a function of the information contained.That in turn, is a function of the “new-ness” & “meaningful-ness” of ...
Meaning gets created in an ongoingdialogue…Real dialogue depends upon true reciprocity…authenticity depends upon the mutua...
Google redefines the relationship and degree of relevance it hasevery day… outside of defining the brand, it defines itsac...
Value in whatplaces? Value inwhatspaces?Value at whattrade-off ofinterests?
Value is exponential to the degree ofengagement that takes place.More = Better.Greater quality = Better.More meaningful (n...
Truth & authenticity = integrity,without that no value or meaning ispossible.
Conclusions.• The paradigm is shifting.• A new context, content, demands a new way of working.• This means:– A new recipro...
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Inverting brand paradigms

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A challenging presentation about brand issues, challenges, paradoxes, questions and trends - issues that underlie brand development, brand evolution, the relationship of brands with their diverse stakeholders, the impact of social media upon brands and how brand meaning is created and managed.

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Transcript of "Inverting brand paradigms"

  1. 1. InvertingBrandParadigms14/ 06/ 2013
  2. 2. Is business still about the creation ofinvestor value?
  3. 3. No! But also yes… value is still about creatingmore than we consume…• Increasingly, brands are being questioned about their environmental, societaland labour ethics, fundamental purpose, values, profit margins and integrity.• This means brands have to find a balance between their diverse stakeholderinterests – one that satisfies all interest groups.• Yet, reciprocity of interests was never how business was defined – it thereforefundamentally questions the global economic paradigms. Yet, there are noclear answers to it.• It means business needs to find ways to be more productive, without incurringgreater labour or other costs or making staff work too hard; charging toomuch for their brands that it distorts the competitive context or value deliveryequation; use inferior materials in the process of production; distort the valueequation for brand users - or do anything that distorts the input: throughput:output balance.• It is arguable as to how a brand can do this sustainably… it will rely upon avery fine balance of interests of value created and value delivered. And allhave to be totally transparent. There is even a limit to what the very bestvalue delivery can charge.
  4. 4. What value?Value forwhom?How isvaluecreated?
  5. 5. TheBrandProvidersof capitalProducersof brandsValue &MeaningPrice & CostCompetitive &comparativecontext.Balance of power& interests.Depth ofauthenticity &integrity.Longevity &sustainability.Society.
  6. 6. Can true reciprocity between the ownersof capital and society ever exist?It will require a new mindset!And greater levels of transparency and engagement.Yet, we need to create more than we consume, otherwise we will consume theplanet, as we are doing in some ways today! All resources are part of thisequation, capital, natural resources, clean air & water, people skills, etc.
  7. 7. Most brands are parity offers,they do very little that differentiates.Consumers even see them as being thesame.
  8. 8. Real functional innovation will defineconsumer and investor value.• This undermines value in categories, i.e. airlines.• This undermines consumer choice, because even if there are manybrands, the lack of discernment makes choice almost incidental.• This undermines category value.• Over-time, it erodes brand value.• The only way out of this remains innovation, hence the battle betweenSamsung and Apple.• Innovation will drive higher demand – but it will arguably only be able todo that up to a point.• Transparency sets a theoretical limit upon what innovation can charge.
  9. 9. The paradox of innovation.• Innovation holds the seeds of its own demise, just look at Apple today:innovation “re-sets” consumer expectations to accelerate at an everincreasing rate.• The more you innovate as a brand, the more you need to innovate toremain competitive. I call it the “paradox of innovation”.
  10. 10. How brand development evolves.Customer needs& wants.Currentcustomerbehaviour. Technologicalcapabilities.Currentcompetitivecontext. Convergentindustries & lateralcompetitors.THE TREND LINECopying/traditionaldifferentiation.Imagination.Solving basicproblems peoplehave.Creating meaningaround ideas/ concepts.Brands that solvebasic problems.Traditional research useful Exploratory, experimental, pilots
  11. 11. Understanding people, patterns and howthey create meaning and engage.• Despite fears of “1984”, we are now able to understand:– Who, where, how, when and why people use brands.– What works, what does not.– What they do to engage with brands and other people.– What they do to create and destroy meaning for themselves and for other people.– What issues, patterns, viewpoints, new brands and new trends are out there.– What is talked about and why it matters to people.– These patterns are critical to understand how to create brands that will deliver the meaning theywant.• We need to use the data, digital footprint and information at our disposal to reallyunderstand our customers, track their behaviour, understand how they engage, become partof their frame-of-reference in a natural way.• This is why data insights will be the new competitive advantage.
  12. 12. Will we still have brands around, or willthey die?
  13. 13. As long as people have needs; products &services get named = yes.• I find the debate about the future of brands ridiculous: whilst people have needsand companies make things to satisfy these needs, there will be brands.• What has changed, is that brands have to balance their price against their valuedelivery, unless that is fair, these brands will die. Social media accelerates that.Industries that have no differentiation and that have become commodities, areunder threat. Yet, even in highly commoditised industries, there are better andworse players.• So if there are products and services that service needs better than others, theywill bear a name, hence they will be brands. A good name will distinguish itselffrom a bad name – and that remains the essence of branding.• So I find the “no logo” debate a bit futile, even if I buy the sentiment thatunderlies it.• Whilst integrity is now more important for brands; and having a purpose or idealto strive for as a brand – one that is more than just profit, as brand custodians,we can only be the catalyst to remind of and ensure integrity.
  14. 14. We have the rise of the notion of“no value”.
  15. 15. The Internet has created a widespreadnotion that great content is “free”.• Whilst there are important exceptions to this rule, it is a fact that theInternet is dominated by free content.• Beyond this, there is widespread copying of content, by people who wouldnever consider themselves being “thieves”.• Price is no longer a definitive determinant of the quality of content.• This places serious demands upon marketers and brand owners.• Whilst the the notion of “value” is endless, the notion of “margin” is finite.• Why pay for a small, local newspaper brand when you can get a globalmedium for free?• The historic logic of value delivery is totally distorted and there is no clearanswer all agrees to.• This is a fundamental shift for business with no clear answer.
  16. 16. Consumer decision making is brandfocused, not product focused.
  17. 17. This argument is not new…• The famous article by Levitt, “Marketing Myopia”, is old, yet most companies stilldefine their brands within set industries.• This means we remain parochial as brand owners in how we view competition.This restricts innovation and brand value.• Competition is always from the viewpoint of consumer-choice, and often bearslittle relationship to traditional competitive boundaries.• Apple redefined many “categories”, again reinforcing that traditional categories areoften irrelevant to consumer decisions about brands.– An Apple iPod is an MP3 player, a replacement for CD’s, a replacement for a music store and manyother things… it transcends many existing product categories. It very being made many other thingsobsolete.– As convergence grows, this is true for brands like Google, etc.• Prof Gary Hamel states that 90% of innovation will come from outside of yourindustry, so there is little point in reviewing trends within your industry, you needto look at other industries.
  18. 18. This argument is not new (cont.)…• Industries are overlapping, replacing one another and converging.• Consumers are making buying decisions between, alongside and across industries– very rarely even thinking within traditional industry boundaries of brands.Consumers find solutions to their problems or yearnings, regardless of where theycome from.• Brands and their value delivery are thus more important than products orindustries, as brands can transcend categories of needs or given sets ofcompetitors.• Yet, most brands are not defined this way.• This gives rise to what I call “concept brands”, brands whose value-set is greaterthan the traditional boundaries of industries. Some brands are more able thanothers to transcend categories, i.e. Apple and Sony versus Nokia or Toyota.
  19. 19. To re-construct value, you need to de-construct howcustomers solve problems & reconstruct how value iscreated.Then you need a serious overlay of imagination.Useful toolkit fromOsterwalder&Pigneur.
  20. 20. You then need to re-construct value logically.
  21. 21. All of what a brand will ever do, is to retain and grow therevenue and margins from the customers we have;and acquire the customers we want,at the margins we require and consumers are willing to pay.This is true for any business.Acquiringnewcustomers.Increased customer value.More products, same segments.Building brand value/ business value.This is detailed overleaf.
  22. 22. The number of clients.The lifetime value of these clients.The profit margin of these clients.÷At the same or a lesser cost to acquire,retain and service than rivals.Actual revenue.Cash-flow.Actual profit.Company value.Profit margin.Share price.Growth potential/ sustainability of revenue & profit stream.Leveraging customersto create companyand brand value.Adapted from: MIT Sloan Management Review, Can Marketing Lift Stock Prices? Summer 2011.Is a function of:
  23. 23. 1. Whatever we do is designed to build company value forstakeholders, both internally & externally. This may change, butcapital will only be available if the trade-off makes sense tothose who have capital.Stock marketvalue
  24. 24. 2. The tools we use to do this, are revenue and margin derivedfrom customers: acquiring them, keeping them and growingthem. At the same or less costs than rival companies.Leverage thelifetimevalue of theconsumerStock marketvalue
  25. 25. 3. This means retaining the right customers, growing theirrevenue and margins, and acquiring the desired customers.Leverage thelifetimevalue of theconsumerMediumcustomerlifetime valueLow customerlifetime valueHigh customerlifetime valueNegativecustomerlifetime valuePotential highconsumerlifetime valueStock marketvalue
  26. 26. 4. To do this, we need to identify the right market opportunity; the righttarget customers; the right strategy & the right marketing communications/media and brand delivery.At the same or a lesser cost than rivals.Leverage thelifetimevalue of theconsumerMediumcustomerlifetime valueLow customerlifetime valueHigh customerlifetime valueNegativecustomerlifetime valuePotential highconsumerlifetime valueWhat must be done, andhow must it be done, toachieve incremental growth.This sets clear andmeasurable objectives,enables accurate specs andoutlines key activities.It ensures all activities andresources are aligned toachieve business growth.Stock marketvalue
  27. 27. Creating & managing customer value is a function of variouselements that systematically and incrementally build: it isunlikely that this equation will ever change.BrandCommunicationsexpressionBrandTradeexpressionInfrastructural & marketing costs to deliver the brandMarketopportunityor GAPValueproposition &strategyThe alignment of those elements that construct brand value for thecustomerX X XBrand sales;brand marginBranddeliveryMarket, industry and competitive factorsXThe marketplace results achievedGrowth is incremental and multiplies results: the greater the alignment, the better and more efficient theoutcome, conversely, the non-alignment of an element undermines the process of value creation. Optimalalignment = optimal resource alignment.
  28. 28. Brand relevance lies in an ongoing dialogue inwhich “brand meaning” is defined and re-defined.
  29. 29. From one-way communication to interactiveengagement.• The traditional notion was that brand names & identities were “short-hands”for the brands and what they offer.• Today, I believe they are instruments of reciprocal engagement between brandinterest groups.• This means they are:– Active, not passive.– Variable.– Not just identifiers.– They become the “language” by which a brand engages, not just a name and identity. Themore a brand can create a new language, the stronger it will be. The more it can create itsown set of symbols, dialogue, words, associations, new terminology, new icons, new set ofmeanings, the stronger it will bond with contemporary issues and people. This means brandswill either evolve - or they will die.– They become “creators of meaning” (compare Roberto Verganti), hence a process of valuecreation where the brand constructs meaning and value through its ongoing engagement withcustomers and other stakeholders.– This inverts the traditional brand paradigm, where “meaning” is owned by the brand owner.Now meaning and its related value is in constant flux and gets redefined all the time.
  30. 30. “Meaning” is a function of the information contained.That in turn, is a function of the “new-ness” & “meaningful-ness” of theinformation.That means the process of engagement, determines the value of the meaningcreated. So much of the value of a brand lies in how it engages with me… inbrand design terms, this means the traditional concept of “information-design” gets far greater traction.
  31. 31. Meaning gets created in an ongoingdialogue…Real dialogue depends upon true reciprocity…authenticity depends upon the mutual give of meaning...“Meaning” will only be “meaningful” if it is rewarding to all.
  32. 32. Google redefines the relationship and degree of relevance it hasevery day… outside of defining the brand, it defines itsaccess, accessibility, authenticity, IQ and EQ.Google becomes “me”, and I become my own Google.This means it awakens freshinterest in, a new relationship with,a growing expectation from thebrand every day, hence it redefinesthe brand meaning every day. Thebrand listens & responds & grows…hence its value gets redefined.
  33. 33. Value in whatplaces? Value inwhatspaces?Value at whattrade-off ofinterests?
  34. 34. Value is exponential to the degree ofengagement that takes place.More = Better.Greater quality = Better.More meaningful (new) = Better.More personal = Better.More unique = Better.Too structured = Bad.Too inflexible = Bad.Too “me” = Bad.“I” = Good.
  35. 35. Truth & authenticity = integrity,without that no value or meaning ispossible.
  36. 36. Conclusions.• The paradigm is shifting.• A new context, content, demands a new way of working.• This means:– A new reciprocity between the interest groups, one that has no simple and clear answer about howreciprocal value will be created yet.– Increased emphasis upon brand value creation.– A more complex environment where most content is free, undermining the definition of valuefurther.– Redefining the ways in which brands are created, managed and how value is delivered to consumers.– A change in how brands engage with consumers and in how meaning is created.• Defining an era of meaningful brands, engaging in meaningful ways, deliveringmeaning to all stakeholders in a manner that is reciprocal.• Underlying this, will remain consistent ways in which a brand is managed, but itwill require greater insights, use of information and imagination: to createmeaning in which all stakeholders will benefit.• Meaninglessness will have no value and no role.• As brand custodians, what is our role in creating this new meaning?

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